Medium-term Business Plan

August 4, 2023
(Revised)1

０.Agenda
1. The Thirteenth Medium-term Business Plan
2. Review of the Previous Medium-term Business Plan
3. Long-term Vision
4. Framework of the Thirteenth Medium-term Business Plan
5. Thirteenth Medium-term Business Plan (Financial Indicators)
6. Growth Strategies (1) Establishing Growth Drivers(2) Customer Oriented Marketing(3) Cross Selling Strategies(4) Business Model Transformation(5) Other Ongoing Measures
7. ESG
8. Shareholder Returns
9. Cash Flows (CF) and Capital Allocation
Appendix (for greater insight into NIKKON Holdings)
2

1. The Thirteenth Medium-term Business Plan
In its previous Medium-term Business Plan, NIKKON Holdings adopted the basic policy of "strengthening management foundations toprovide customers with the high value-added services they demand," and we have worked to expand our business by making
proactive capital investments in response to our customers' business plans. Despite seeing delays in plans due to the COVID-19
pandemic, semiconductor shortages and other factors, we believe the NIKKON Holdings Group has achieved a slow but steady buildup.
However, in the international community, confusion due to ideological conflicts between nations such as the US-China decoupling andRussia's invasion of Ukraine have had a major impact on economic activity, with dysfunction in logistics creating bottlenecks
throughout the supply chain. Due to a growing multi-axial shift and fragmentation of the international community, the economic
environment surrounding Japan has become increasingly opaque, bringing uncertainty to the global economic recovery. In response,
many companies have predicted the future business risks they face and begun working to rebuild their supply chains with the aim of
mitigating risks in the medium- and long-term.
In addition, with slim prospects for market expansion amid a declining domestic population and aging society, even though the
COVID-19 pandemic and rapid digitalization of society have brought about changes to people's values, logistics is an essential
business that supports the foundations of life, namely food, clothing and shelter. We see it as our mission to continually enhance thequality of logistics and in so doing contribute to society.
“Contribute through our business activities to the realization and sustainable growth of a prosperous society that enables people tofeel truly happy” has been framed as the basic policy of the Medium-term Business Plan. Over the next three years, with a view tofive and even ten years down the road, we will aim to take on the challenge of new businesses and move on to a higher stage.
In these tumultuous times, NIKKON Holdings will always default to its action guidelines of listening widely, thinking deeply and acting
strongly, integrating the growth of employees with company development and solving issues facing society and the industry while
contributing to society through logistics. We will continue to be a company that holds up those values.
May 12, 2023

3

2. Review of the Previous Medium-term Business Plan
In the previous Medium-term Business Plan, our progress was delayed by almost a year longer than planned, inpart due to a sluggish market due to the pandemic and a stagnation of cargo due to component supply shortages
including semiconductors. In addition, in the fiscal year ended March 31, 2023, profit margins declined, in part due
to the sharply rising prices for fuel and personnel, driving by the situation in Ukraine and the rapid depreciation of
the yen.


Based on the future business plans of our major business
partners, we engaged in capital investments totaling 78.8
billion yen over three years, while the NIKKON HoldingsGroup launched six new sales locations, 22 newwarehouses and added 245,000 m2 of space, in
anticipation of a post-pandemic market recovery.

Moreover, in addition to the expansion of businessresources, we have also worked to develop new
customers. As a result, over the period of the Mediumterm Business Plan both sales and profit steadily
recovered despite feeling the impact from the pandemic.

However, in terms of operating profit, margins declined
due to a time lag in reflecting sharply rising fuel costs insales prices, volatile production plans on the part of major
shippers and higher costs due to a mismatch of personnel
resources at NIKKON Holdings. Even so, we havecontinued to resolve these issues as production stabilizes.
43. Long-term Vision (2030 Vision)- Becoming a Company Needed by Society Aim to be a company that can compete on the global
JPY: biostage.
500

400

300

500

🔶 Solve the issues society faces through our business activities

14.0%

🔶Provide new value to people and society through our traditional
enterprising spirit
13.0%🔶Place the company on a sustainable growth trajectory through astable earnings structure🔶 Share the joy of social contribution and create arewarding and280
ethical workplace
250【Sales】

200
200

15.0%

12.0%

230

183

212

198

11.0%

10.5%

10.0%

10.0%

10.0%

9.8%
9.6%

10.0%

9.6%

9.2%

100
9.0%
【Operating Profi】

0

21

18

20

20

22

24

28

Mar-20Mar-21

Mar-22Mar-23Mar-24Mar-25Mar-2612th Mid-Term Plan

13th Mid-Term Plan

50
8.0%

Mar-27Mar-28Mar-2914th Mid-Term Plan

Mar-30Mar-31

Mar-32

15th Mid-Term Plan

5

4. Framework of the Thirteenth Medium-term Business Plan
Challenge 13“Contribute through our business activities to the realization and sustainable growth of aprosperous society that enables people to feel truly happy”.
Streamlining and review of existing businesses (Improvement of profitability).
Establishment of growth drivers (Expansion of businesses while simultaneously creating the next core businesses).
Enhancement of corporate value through ESG-oriented management (Continuation of efforts to remain a company neededby society).
Establishment of human resource foundations (Development and securing of next generation human resources to ensuresustainable growth).

Growth Strategies[Establishing Growth Drivers]
Recycling / Food, Clothing and
Shelter / Overseas- Customer-oriented- Cross selling- Business model transformation- Network expansion- Real estate business- M&A

Growth Investment- Warehouses, vehicles, capital
investment- Digital investment- Investment in improved quality

Sustainability- Transportation safety and zero
occupational accidents- Cultivation of human resources andskills development- Environmental investment

Business Streamlining- Improved labor productivity- Cost reductions

Capital Strategy /Shareholder Return
Cash Flow Management
65. Thirteenth Medium-term Business Plan (Financial Indicators)
In the next Medium-term Business Plan, we will aim for CAGR of 9.7%, up from the CAGR of 4.2%
achieved over the past ten years.
Sales・Operationg Profit

KPIs in the Medium-term Business Plan

280

12.0%

250

250

11.5%

230

212
200

【Sales】

11.0%

198

183
10.5%

【Operating Margin】

 Under our plan for net sales, we will develop new customers
and make constant capital investments to continue with stable
growth. We will aim to achieve net sales of 280 billion yen,which corresponds to a CAGR of 9.7%.
 In addition to factors such as rising fuel prices and personnel
expenses, costs to respond to social issues and other action
have made the future cost environment unclear. Working
under these conditions, we will implement proactive cost
reduction activities and pass on price increases as necessary
to achieve a profit margin of 10.0%.
 Based on a profit plan and capital strategy consistent with ourbasic policy of "self-sufficiency and managing our hand," weaim to achieve an ROE of at least 8.0%.

150

10.0%

10.0
%
9.8%

10.0%
9.6%

9.6%
9.5%

9.2%

100

9.0%
50

8.5%
【Operating Profit】

18

20

20

22

24

28

0

8.0%

Mar-21

Mar-22Mar-23Mar-24Mar-25Mar-26

6.9%

7.1%

‐

-

8.0%

【ROE】

7.3%

ResultMid-Term Plan

7

6. Growth Strategies (1) Establishing Growth Drivers
Development and organization of growth drivers
A new organization is built within the Holdings business division to facilitate the development of growth drivers.

[Recycling Business]- Achieving a Circulation
Business -[Clothing, Food and Shelterrelated Business]- Development into a recycling business thattreats materials itself- Collaboration between recycling businesses
and emission-generating operating companies- Area of contribution to existing logistics lines- Entry into the three-temperature-range logistics
business- Development of a sensitive logistics operating
structure- Expansion into the Kanto, Chubu and Kansai areas- Pursuing Logistics More Closely Related to
People's Daily Lives -[Overseas Business]
Expansion of Overseas Business- Development of local businesses overseas- Expansion into new overseas business areas

Establishment of Specialized Units / Securing of Resources / M&A8

6. Growth Strategies (2) Customer Oriented Marketing
We will provide high added-value services that match the long-term growth strategies of key customers.


Leveraging our solid customer bases in Japan and overseas, we will work with the medium- to long-term businessstrategies of customers to upgrade our human resources and logistics facilities and gradually expand our business.

Embracing the idea of "self-sufficiency and managing our hand," we will actively invest in in-house capital, including
efforts to respond to decarbonization and electrification in the automotive sector and the outfitting of crane-equipped
warehouses able to handle precision equipment and heavy items, turning those organic strategies into a pillar of ourefforts.



We will continue to acquire companies through M&A activities as a means to secure new logistics technologies andfunctions, with the aim of shortening
the time taken to develop new customers and acquire capital.
35[Investment Plan]• Our plan is to carry out investments in 30
a stable manner, following a roughtarget of 23 billion yen annually while 25monitoring the cash flow situation.
20• In addition to investments in ESG
action including human resources
15
investments as well as DX based onsocial needs and the management
10
situation, we will implement
management in a way that ensures afunding surplus that will allow us make 5
investments flexibly to deal with future0
uncertainties.

33.1

Transportation

9.186

25.9

Warehousing

Packaging

28.3

0.587
2.67

23.2

2.113

0.771
0.88

2.916

15.2
12.075

1.833
0.959
1.57

4.044

11.027Mar-16

6.31
Mar-17

4.523
Mar-18

5.019

2.182

2.529
1.246
1.035

10.574

2.802

22.2
3.073
0.773
1.884

13.82612.38923

23

Mar-24Mar-25

23

7.314

6.328
7.591

16.5

Others

28.3

1.477
1.951

3.18

13.053

6.983

Testing

5.811
Mar-194.422
Mar-206.651
Mar-21

5.154

4.106

Mar-22Mar-23Mar-269

6. Growth Strategies (3) Cross Selling Strategies
We will implement cross selling strategies along three axes, and steadily establish a sales
base through down-to-earth sales activities.
(1) Cross selling along the service axis
While utilizing our own facilities, we will leverage ourstrength in providing one-stop packaging, transportation,
warehousing, customs and overseas services. For example,
we will provide distribution processing services to warehousecustomers and storage functions to transportation
customers, rolling out cross selling strategies that involve
providing a wide range of services to each business partner.

Self-sufficiency
Managing our hand(2) Cross selling along the Group company axis
To create synergy between Group companies, we will sharesales information between each Group company while
conducting sales activities across Group company boundaries
and providing business referrals on a reciprocal basis in aneffort to optimize and maximize Group synergy.
(3) Cross selling along the regional axis
By filling regional voids we will be able to provide seamlessservice between the whole of Japan and overseas sites,
achieving cross selling along a regional axis and developing
new customers in growth industries.
106. Growth Strategies (4) Business Model Transformation[Mixed Loading of Cargo / N-Logi]
Development of a mixed cargo transportation network- 24 self-managed areas, coverage of Hokkaido, Hokuriku
and Shikoku regions)
Strengthening of sales and field capabilities for mixed cargotransportation- Development of in-house personnel, investments invehicles and equipment
Strengthened sales for mixed cargo transportation- Long items, heavy items and synergy with existing
businesses
Rollout of sales to growth industries[Recycling Logistics / 3Rs: Recycle, Repair, Return]

Expand the scale of recycling logistics- Nationwide collection of lithium-ion batteries- Expansion into new fields (waste plastics,
fluorocarbons, air bags, etc.)- Acquisition of added-value businesses
Coordination with mixed loaded cargo (utilization of
N-Logi service)
Acquisition of collecting and transportation license
covering all of Japan[Real Estate Business]
Commercial asset development- Filling of unoccupied and key areas
Property management- Cost reductions and improved profitability- Cost amortization and financial strategies
Effective utilization of profitable properties and idle
land
Development of peripheral businesses to logistics realestate[M&A]- Filling of void areas to develop site network- Securing of necessary resources maintained internally(facilities, human resources)- Acquisition of new customers and commercial rights- Businesses expected to product synergy with existing
businesses- Acquisition of new business expertise11

6. Growth Strategies (5) Other Ongoing Measures[Expansion of the Customer Base]- Respond to the shift to EVs in the automotive
industry- Respond to the restructuring of suppliers- Growth industries (industrial robots, precisionequipment, pharmaceuticals)- Focus on the environmental and recycling fields- Sales activities consistent with the customer
network[Network Extension / Expansion of Self-sufficiency
Capabilities]- Establish a network of sites in accord withcustomers' supply chains- Upgrade warehouses and facilities to meetcustomer needs- Secure Company drivers- Refine ability to manage our hand
- Transportation options combining sea and rail
- Strengthening of Group human resources, hiring
and training[Existing Overseas and International Strategies]- Strengthening of supply chains between Japan andoverseas, and between multiple overseas locations- KD production, enhancement in the overseas
operating field- Active capital investment- Enhancements to import/exports customs
businesses and related businesses- Provision of Japanese quality even overseas
・Use our overseas sites to expand into local
businesses[Business Expansion Upstream, Downstream and in the
Periphery]- Diversity operations in peripheral businesses- Internalize suppliers and distributors- Acquire outside knowledge to strengthen logistics
functions- Strengthen systems aimed at improved safety andquality- Sell accumulated internal know-how externally127. ESG (1)We will actively address global environmental
and other social issues through our logistics
services, working with all stakeholders toshape a sustainable society consistent withour basic principles.
Basic Principles
Through business logistics based on a global
perspective, we will contribute to social prosperity
together with customers, shareholders and employees
by leading the way in creating common joy, relatablevalues and a co-existent environment.

Environment
Introduction of eco-friendly vehicles /bio fuels
Solar panels / on-site PPA
Total elimination of mercury lamps /replacement with LEDs
Modal shift, utilization of full trailers,
improved mileage, GreenManagement certification

Our Founding Spirit
Contributing to the prosperity of society by acting inconsideration of the public nature of transportation
Working hard with our traditional spirit of enterprise anddriving efforts for our future development
Establishing sound lifestyles by sharing love, respect, and thespirit of cooperation

SocialTransportation safety and the eliminationof occupational accidents
Diversity / Women, people with disabilities
and foreign nationals
Group human resources strategy by the
HR Division
Dialogue with shareholders, enhancementof our PR strategy
Evolution of workstyle innovation

Governance
Strengthening group governance and ourorganizational structure
Strengthening compliance with laws andother requirements
Enhancing risk management
Developing more sophisticatedmanagement, including CO2 emission
calculations
Ensuring effectiveness of the Board of
Directors

13

7. ESG (2) CO2 Emissions
In terms of environmental action, NIKKON Holdings expects that eco-friendly versions of the large
trucks it mainly operates will not be manufactured until 2030 or beyond. For this reason, in our
Medium-Term Management Plan we will actively promote the switch to EV for passenger vehicles andsmall-sized vehicles, the installation of solar panels at our warehouse facilities, and other measures. In
addition to the development and evolution of future environmental technologies, we expect to see
environmental improvements such as recharging facilities and other social infrastructure, and avenues
for cost shifting to develop. Meanwhile with regard to large trucks, we will promote introduction instep with the eco-friendly vehicle manufacturing schedules and progress of auto makers.

Modal shiftTwo-trailer vehicles, full trailers
Fuel efficient, eco-friendly driving
Power-saving, eco-friendly products

Introduction of EV/FCV trucks
Purchase of green electricity
Utilization of carbon credits

Introduction of 120 EVs for use as passenger cars
Trial introduction of large hybrid trucks
Home-use solar panels gradually configured and introduced
Total elimination of the use of mercury lamps and replacing
them with LEDs
14

7. ESG (3) Key Performance Indicator
Towards achieving carbon neutrality in 2050, in the next Medium-Term Management Plan we have set a reduction target of 3% compared with FY2022. We have also set a FY2030 target of -30% in anticipation of various technologies being
developed including the shift to large electric trucks, and will continue to take on these challenges. In terms of championing
the success of female employees, we have set the target of women accounting for 30% of all Group employees. To start
with, we will increase the number of women among new graduate hires, and in addition to training and motivational efforts,
we will develop infrastructure and environments that are more conducive to female employees, steadily laying the
groundwork for the promotion of women to managerial positions.

【CO2emissions(scope 1 and 2)】* Reflecting the enhanced and refined calculation of emissions, actual CO2 emissions in FY2023/3 were revised to 174,801
tons. 【Ratio of female employees】【Employment of People with Disabilities】- Meet standards for statutory employment rates at all applicable business sites.
15

8. Shareholder Returns[Dividend Payout Ratio]- In FY2022, NIKKON Holdings announced that it would raise its target dividend payout ratio from around 30% to approximately 40%.
In addition, starting with dividend payments for FY2023, we will introduce a cumulative dividend scheme ensuring that dividends per
share for the full year do not fall below those from the previous year. We plan to maintain this policy for the time being.
[Acquisition of Treasury Shares]- We announced the policy of continuously purchasing treasury shares of approximately 10 billion yen over a period of three years
from the fiscal year ended March 2023, and as of October 13, 2022, we have purchased 1,352,000 treasury shares worth 2.999
billion yen. In addition, on August 4, 2023 we announced an additional acquisition of treasury shares amounting to 4 billion yen or
1.5 million shares (acquisition period from August 21, 2023 to January 31, 2024).
- On May 31, 2022, we cancelled 2,500,000 shares of acquired treasury shares. We will consider the treasury shares we plan to
newly acquire for use as stock options, stock-based compensation and M&A activities, and continue to cancel shares that are
deemed unnecessary.

169. Cash Flows (CF) and Capital Allocation
Cash flow from operating
and financing activities

Growth Investment- Capital investment inwarehouses and vehicles- Introduction of robots,
investments in labor saving- DX investment- M&A
Approx. 23 billion yen annuallybased on cash flow fromoperating and financing
activities

Capital policy and returns to shareholders
We have adopted the basic policy of providing stable and continuous shareholder
return based on business results over the long term, and will set a shareholder
return policy that strives to achieve a financial balance while considering both
debt and equity investors.

Growth Investment

We will continue to make necessary investments according to a basic policy oflong-0term and stable investment within the scope of operating cash flow toreflect the business plans and expansion strategies of customers. In addition tocapital investments in warehouses and vehicles, we will focus on investment aimed
at future growth areas, including R&D investment into test businesses and DX
investment.

ESG investment
ESG investment- Environmental investment- Human resource investment

Payout ratio: 40%
Purchase of treasury
shares
10 billion yen over three
years from FY2022

While environmental action is a priority issue for the logistics industry, thesignificant impact that rising costs have on profits is a difficult challenge. We will
make investments that are well balanced with profit, reflecting the advance oftechnological development that can be introduced.
We will also improve the hiring and training of personnel to respect to theincreasingly tight labor market.

Funding
For the investments we need to make, in addition to operating cash flow we willconsider an appropriate balance of debt and equity and engage in more efficientfinancing.

17

Appendix(for greater insight into NIKKON Holdings)

18

[NIKKON HOLDINGS Date]
March 31,2023

overview

Company name

Nikkon Holdings Co.,Ltd.

Established

August 27 ,1953

Head office6-17 Akashi-cho,Chuo-ku,Tokyo

Representative

President and Representative Director

Capital stock

11,316 million yen（As of March 2023）

Number of employees

20,243 (11,698 in Japan, 8,545 overseas)（As of March 2023）

Number of shareholders

4,259（As of March 2023）

Number of shares issued

65,739,892 sharesFiscal period

March 31

Stock listings

Tokyo Stock Exchange Prime Market (securities code 9072)

Industry

Land Transport

Affiliates in Japan

45 companies, 284 business sites

NIPPON KONPO UNYU SOKO CO.,LTD.
89 business sites

Affiliates

198 business sites

Overseas affiliates

Number of affilates 29 in nine countries（United States,China,Thailand,Philippines,Indonesia,Vietnam,Mexico,India,Malaysia）

Group operating fleet

Japan Business locations 3,789 ,Overseas Business locations 760,Total4,549 （As of March 2023）

Group warehouse area

Japan Business locations 2,317,368㎡、Overseas Business locations 492,841㎡、Total 2,810,209㎡ （As of March 2023）

19

[Group Philosophy]
Corporate Philosophy
We will contribute to the prosperity of our customers, shareholders, employees, andsociety by leading the way in creating common joy, relatable values, and co-existentenvironment through business logistics based on a global perspective.
Group Code of Conduct
NIKKON Holdings Inc. and its subsidiaries shall adhere to the NIKKON Holdings Group Basic Principles, fulfill their corporate
responsibility in relation to customers, shareholders and communities through sound business activities, and contribute to
the development of society.
To achieve this, all employees of NIKKON Holdings and its subsidiaries will work together to put into practice the NIKKON
Holdings Group Code of Conduct.
１. We will aim to achieve zero incidents and occupational accidents based on the principle that safety takes precedence
over everything else.
２. We will complete with laws, regulations, social rules and internal regulations, engaging in corporate activities with theaim of earning the trust of society.
３. We will actively tackle environmental issues with the aim of becoming a company that benefits the global environment.
４. We will positively and fairly disclose corporate information to shareholders, customers and local communities.
５. We will make every effort to appropriately manage and protect personal information and the information of customers.
６. We will endeavor to provide services that are beneficial to society and make social contributions.
７. We will engage in fair, transparent and free competition, aiming to be a company in which employees and theirfamilies take pride.
８. We will take a resolute stance against antisocial forces and groups that threaten the order and safety of society.
９. When circumstances that violate the principles of this code occur, we will take swift and strict action to resolve theissue and make every effort to prevent recurrences.

20

[Corporate History]
NIPPON KONPO UNPAN CO., LTD. is established with one million

August 27,1953 yen in capital as a land parcel transportation and cargo handlingbusiness and business handling cargo to and from railroads(Tsukiji 1-3, Chuo-ku, Tokyo) Founder: Tsuneo Kuroiwa

October 1968

Motorcycle packaging
Packaging style at the time of our founding
Motorcycle packaged using straw

Company name changed to
NIPPON KONPO UNYU SOKO CO., LTD.
Developed one side-type four-wheeled vehicle carrier

One side-type four-wheeled vehicle carrier

November 1989 Developed two-level floor elevating-type JR containers
April 1956

Developed two-floor trucks (began uncovered transportation)

Bonnet vehicle

April 1957

Invention of diagonal loading method

August 2003

First in Japan to modify an underfloor vehicle into a two-floor vehicle,
enabling 28 Honda Dreams to be carried. Having broken the record forthe largest among trucks at the time, it was nicknamed "Mammoth“
Shift from rail transportation from train stations to truck-based longdistance transportation

Two-level elevating-type JR container
Developed 19-meter vehicle carrying full trailer
and 19-meter two-level carrying wing full trailer

19-meter vehicle
carrying full trailer

October 2015

Modified underfloor vehicle

19-meter two-level
carrying wing full trailer

Transitioned to a holding company structure andchanged company name to NIKKON Holdings Co.,
Ltd. Split company with majority of business handed
over to the newly established NIPPON KONPO UNYU
SOKO CO., LTD.

[Change in Groupwide Net Sales]- Sales are among the top ten in Japan compared with others in the industry. Since our founding, we havemanaged steady growth outside external events such as the 2008 global financial crisis and COVID-19
pandemic, while simultaneously maintaining one of the highest operating margins in the industry.

In addition to NIKKON on a non-consolidated basis, since 1992 NIKKON
shifted to Group consolidated results, and transitioned to a holdings
structure in 2015.
We have continued to grow while demonstrating outstanding Groupsynergy effects.

22[Financial Highlights①]（million yen）

2018/3

2019/32020/32021/32022/32023/3

Net sales

187,819

197,693

199,512

182,536

198,159

212,071

Operating profit

19,00920,02820,89018,191

19,512

19,580Operating profit ratio

10.1%

10.1%

10.5%

10.0%

9.8%

9.2%

Ordinary profit

20,71522,01922,525

20,572

21,584

22,122

Ordinary profit ratio

11.0%

11.1%

11.3%

11.3%

10.9%

10.4%

Net profit

14,545

14,76816,721

14,544

14,741

15,913

Profit ratio

7.7%

7.5%

8.4%

8.0%

7.4%

7.5%

（million yen）

2018/3

2019/32020/32021/32022/32023/3

Total assets

286,013294,213

297,489

322,139

339,475

360,748

Shareholders' equity

182,101

186,338

192,780

207,747

218,478

228,873

Equity ratio

63.7%

63.3%

64.8%

64.5%

64.4%

63.4%

Depreciation

9,461

9,712

10,413

10,630

11,237

12,307

EBITDA(Operating profit + Depreciation)

28,47029,74031,303

28,82130,74931,888Asset turnover ratio(Net sales / Total assets)

0.66

0.67

0.67

0.57

0.58

0.61

ROA

5.1%

5.1%

5.7%

4.7%

4.5%

4.5%

ROE (Return on equity)

8.2%

8.0%

8.8%

7.3%

6.9%

7.1%
23

[Financial Highlights②]
1900/1/24

2021/32022/32023/32021/3Current assets

74,54274,65583,026

Current liabilities

Cash and deposits

31,39930,22740,2212022/32023/3

46,26944,36758,358Notes and accounts payable - trade

9,799

11,537

11,240Electronically recorded monetaryclaims-operating

5,521

6,200

6,682

Short-term loans payable

3,843

1,823

13,15167

85

60

Notes and accounts receivable - trade33,38035,11033,408

Electronically recorded obligations –operating

3,704

3,545

3,647

951

456

265

−

−

−

Income taxes payable

4,186

3,645

4,467

408

531

562

Provision for bonuses

Other

4,713

4,797

Allowance for doubtful accounts

△15

△12

Securities
Merchandise and finished goods
Raw materials supplies

Lease obligations

3,785

3,977

3,930

4,935

Provision for directors’ bonuses

183

196

213

△14

Notes payable – facilities

242

489

99

6,470

3,929

4,299

Other

12,16812,482

14,215

Electronically recorded obligations – non-operating
Non-current assets

247,596

264,819

277,721

Non-current liabilities

67,57976,072

72,990Property, plant and equipment

213,928

232,328

242,671

Bonds payable

40,00050,00050,000

2,073

2,173

2,368

Long-term loans payable

15,033

13,21010,05931,59530,31732,681

34

88

81

5,570
5,088

5,138
5,696

5,481
5,413

395

435

454

1,457

1,502

1,501

208,290
197,593

219,035
207,380

229,399
214,926

10,154

11,098

13,947

Share acquisition rights

320

227

210

Non-controlling interests

222

328

314

322,139

339,475

360,748

Intangible assets
Investments and other assets

Lease obligations
Deferred tax liabilities
Net defined benefit liability
Provision for directors 'retirement
benefits
Other
Total net assets
Shareholders’ equity
Total accumulated other comprehensive
incomeTotal assets

322,139

339,475

360,748

Total liabilities and net assets

24

[Business Segments]
Net Sales and Operating Profit for the Fiscal Year
Ended March 31, 2023 (million yen)
Business
Segment

Sales

Propotion

Operating Profit

Operating profit
marginTrasportation

96,744

45.6%

5,062

5.2%

Warehousing

37,729

17.8%

8,422

22.3%

Packaging

49,591

23.4%

3,008

6.1%

Testing

20,942

9.9%

2,223

10.6%

Others

7,063

3.3%

1,103

15.6%

Total

212,071

100.0%

19,5809.2%

JPY: mio

Change in Net Sales of Each Business Segment (million yen)・Looking at the share of net sales by segment,
the transportation business accounted for nearly
half of all sales, following by the packaging
business, warehouse business, and testing
business. However the warehouse business andtesting business, which boast relatively high profit
margins, have accounted for an increasing shareof total sales in recent years.
・Even so, the business of NIKKON Holdings
involves close integration between each segment,
and rather than improvements to one businessalone, progress brings growth and expansion to
all businesses.

25[Business Segment: Transportation][Transportation Business]- 45 domestic Group companies, 287 operating locations, and 3,789 Company-owned commercial vehicles.
- We maintain over 130 sets of full trailer trucks coupled with two trailers. In addition to engaging in efficient trunkline transportation in eco-friendly ways and implementing measures to achieve labor savings by transferring drivers,
we maintain around 600 carrier cars in Japan and boast one of the largest market shares for finished vehicletransportation in Japan.
- We proposal optimal transportation methods based on cargo characteristics, such as the development of special
vehicles to match the characteristics and weight of cargo. We provide services to transport finished two-wheel andfour-wheel vehicles, housing equipment, agricultural machinery and other items at a nationwide level.
- The consolidated cargo service N Logi enables the transportation of cargo that is long, large or heavy, unpackaged
goods and goods in small lots through a nationwide consolidated cargo transportation platform. By combining an
integrated TMS (transportation management system) with collection and distribution capabilities based on trunk linetransportation using full trailers, we propose visible logistics that incorporate optimum lead times and high quality.
We have build a transportation structure reaching 24 prefectures based on self-operated sites that utilize a trunkline transportation network extending from five hub centers. Going forward, we will build a nationwide
transportation network including Group companies.
- In addition, through subsidiaries we engage in newspaper deliveries and also operate taxis and buses.

26

[Business Segment: Packaging][Packaging Business]- In addition to packaging materials, picking, and other operations related to product transportation, thePackaging Business transcends the concept of packaging, providing all manner of services including the proxydelivery of automotive parts, distribution processing such as assembly of industrial products and tagging,product inspections, acceptance inspections and the development of packaging materials covering everythingfrom import/export packing and unpacking to packaging specification design and the development of
packaging materials such as buckets and carts.
- The business also excels in the installation, assembly, calibration, trial operation, disassembly, transportationof machinery and production lines, along with integrated domestic and overseas operations.
- For packaging, we utilize lightweight and durable packaging materials and seek to prevent product damage
while limiting costs as much as possible. In addition, for efficient delivery and manufacturing during
unpacking, we consider optimum stowage and the order of loading into containers and trucks, while also
taking care to balance loads so the total load is not skewed in one direction. Additionally, by selecting
packaging materials that can be repeatedly used and other eco-friendly materials, we engage in businessactivities consistent with our environmental policy.

27

[Business Segment: Warehousing][Warehousing Business]- NIKKON Holdings maintains warehouse space of 2.32 million m2 in Japan and 490,000m2 overseas,
totaling 2.8 million m2 worldwide. A wide range of items are stored and processed for receiving anddispatch, from industrial goods such as automotive components and precision machinery to housing
equipment and foods.

- For domestic warehouses, NIKKON Holdings owns almost 70%, providing a strong source of revenue.
- Each year, we have continued to invest in warehouse facilities to meet market demand. In fiscal 2020,
we increased floor area and facilities by 55,000 m2, followed by an increase of 105,000 m2 in fiscal
2021. In fiscal 2022, 146,000 m2 in company-operated warehousing space was newly added. Over the
past three years, Company owned and managed warehousing floor area has expanded by around 15%.
- Looking ahead, we plan to continue with business expansion by investing in equipment and facilities
including automated warehouses, crane equipment and load-bearing floors based on customer demand
trends and the characteristics of the products we handle.

28

[Business Segment: Testing]- This business started more than four decades ago with transportation staff performing driving duties on vehicle test
courses. Today, in addition to a range of driving and endurance testing for two- and four-wheeled production
vehicles, racing vehicles, automotive parts and agricultural machinery, we also accept contracts from auto makers toanalyze functions such as engine efficiency, transmissions and suspensions, evaluate performance based on different
operating environments from extreme hot to cold, conduct statutory testing and assemble prototype vehicles. As
part of these services we provide the manufacturers that contract us with verification data after performing digital
analyses.
- We maintain three development centers in Tochigi and Hamamatsu with excellent information security to support
customers‘ research and development activities by conducting testing on two- and four-wheeled vehicles,
automotive parts and general-purpose products using various testing equipment.

- We also conduct business in the United States, Thailand and other overseas locations, where we operate overseas
test courses, acquire on-site test data and support development activities.
- We employ many engineers with track records in testing based on various usage environments including onshore,offshore, as well as cold and hot climates. Complex problem solving is possible by combining actual running,
platform-based testing, product verification and other services.

29

[Business Segment: Other Businesses]- With the main purpose of supporting the business of our Group companies, we engage in operations that supplement thelogistics business of NIKKON Holdings, including a real estate business, insurance agency business, customs brokerage, officeand personal relocation services, automotive maintenance, installation of equipment associated with relocation andtransportation, development of logistics systems, and consulting services. We sell some of these services externally as
outward facing businesses utilizing the technologies and knowledge that have been cultivated in-house.
- In the real estate business, we maintain revenue-generating properties as leased office buildings in Wako, Saitama Prefecture
and Chuo-ku, Tokyo. These are strategic investments we anticipate to use for in-house purposes in the future as the Groupbusiness expands.
- Trade-related services such as customs brokerage serve as a bridge between suppliers' domestic and overseas supply chains
and are used to provide a range of linked services such as local transportation, storage and distribution processing. In
Consulting
addition to transportation between
Japan and other countries, we provide optimal solutions by combining means oftransportation via third countries based on international conditions such as market rates for chartered vessels and supplydemand trends.
- The automotive maintenance and insurance agency businesses play a big part in vehicle maintenance and efficient business
operation within the Group.
Real estate businessPetroleum sales

Customs

Power generation and sale

Consulting30

[Customer Segments]- We are expanding our operations into peripheralbusinesses and growth industries, working from abase of business dealings with top notch companies
in each segment.
- The handling of automobiles and automotive
components accounts for a large share of ourbusiness at 58%, providing foundations for stable
growth. Going forward, we will expand and focus on
the transitions to electric vehicles for both finishedvehicles and parts suppliers, as well as batteries andrecycling activities.
- In addition to supporting the growth of theautomotive industry, we will work to expand othercustomer segments including housing andconstruction materials, agricultural machinery, foodand beverages, in an effort to diversify our portfolio.

- In terms of new areas of focus, we will devote efforts
to fields expected to experience growth, including
industrial robots, precision machinery,pharmaceuticals and recycling.

Others22.4%

Automotive

37.2%

Industrial Machinery etc

6.2%
Housing Materials

Auto Parts

13.1%

21.2%

Business

Segment

Sales

Propotion

Automotive

78,78537.2%

Auto Parts

44,87821.2%

Housing Materials

27,71013.1%

Industrial machinery etc.

13,206

6.2%

Others47,49222.4%

212,071

100%

Total
JPY:mio31

[Regional Segments]- In our overseas business, we operate more than 70
business locations through 29 companies spanning ninecountries.

- We aim to establish a business model of providing logistic
services at the same quality level as in Japan locally,
tailored to the overseas expansion plans of Japanesemanufacturers.
- These services are an extension of our supply chain
connected from Japan, and we provide integrated crossborder logistics including everything from packaging forexport compliant with local knock-down (KD) operations
overseas, to customs handling, overseas storage,
distribution processing and parts logistics between multiple
overseas locations.

Area

Japan

- We have also entered the logistics business based on the
North Americasite infrastructure built in these overseas locations. We
have made capital investments based on business demand Asia
in each location and expanded our operations.
Total
JPY:mio

Sales

Propotion

180,46985.1%

12,767

6.0%

18,8348.9%

212,071

100.0%
32

[Competitive Advantage 1] Strong Customer Base
- In business dealings spanning more than seven decades since our founding we have been interacting with auto manufacturers as
our main customers, dating back to the chaotic postwar period when motorcycles were transported in bicycle-drawn carts
wrapped in straw. Today our main logistics company supporting the domestic supply chain of the NIKKON Holdings Groupaccounts for around 25% of Group sales, including as a automotive parts supplier.
- Additionally, in the automotive industry we do business with nearly every manufacturer with very few exceptions, with businessfrom the automotive industry accounting for roughly 58% of our total sales.
- Housing and construction materials accounts for roughly 13% of total sales, mainly through leading Japanese manufacturers.
Similarly agricultural machinery accounts for around 4% of sales chiefly through Japan's top three manufacturers. Major
newspaper companies and food/beverage operations account for about 2% of sales each. In this way, we are supported by top
notch customers, leading to extremely stable business results. In addition, we are increasingly doing business in relation to
growth industries such as industrial robots and medical devices.
- One of our strengths lies in how we make the necessary capital investments based on the business plans of these key customers,
providing high value-added functions and resources in a timely fashion to build trust.

Change in Non-current Assets and Investment (billion yen)

33

[Competitive Advantage 2] One-stop Service- For packaging, transportation, warehousing, customs and logistics businesses in 9 countries
overseas, we have our own resources and service provision functions, enabling us to provide onestop service. For this reason, we are able to roll-out services from the acquisition of a new customer
to peripheral operations and do business with each company in greater depth.
- There are very few competitors in this industry that similarly offer complete service coverage, andwe recognize this as a one of our strong competitive strengths in the industry.
Logistics Functions
Logistics Areas
Countries and Areas

Japan
USA
MexicoChina

Procurement
logistics

Transportation

Production
logistics

Warehousing

India
VietnamPhilippines

Indonesia

Testing
Other

Sales logistics

Customs / Insurance agency /Petroleum sales /Thailand
Malaysia

Packaging

Reverse logistics

Power generation and sale /Real estate business / Consulting
34

[Competitive Advantage 3] Advanced Packaging Technologies and Distribution Processing
Operations- NIKKON Holdings started out as a packaging business, and the advanced packaging technologies and distribution
processing operations we have cultivated since our founding are a key factor that sets us apart from ourcompetitors.
- For auto manufacturers, our main clients, in addition to storage and transportation services, some of ourwarehouses also handle plant functions, where we deliver semi-finished goods that have been temporarily
processed, such as parts assembly based on production plans, to main plants on a just-in-time basis. As ourfunctions form part of the supply chain that includes the manufacturing lines of manufacturers, we believe there
are high barriers to entry for would-be competitors.
- By rolling out this business model to other companies such as housing and construction material manufacturers,
we provide high value-added services and differentiate ourselves from the competition with high profit margins.

- For knock-down (KD) type export operations that involve performing assembly at overseas plants, we also possess
high-quality packaging technologies including the development of packaging materials that can stand up to
overseas transportation over long periods, including measures to protect against corrosion from moisture andimpacts. In addition, to maximize work efficiency based on local production plans, we conduct packaging
operations based on meticulous plans that include component delivery order and optimum loading withincontainers.

35

[Competitive Advantage 4] Self-sufficiency and Managing Our Hand
- Regarding vehicles, we maintain an extensive fleet in Japan of 3,789 self-owned commercial vehicles
including large trucks. With a ratio of 43.4% Company-owned vehicles to 56.6% chartered, we boast
a higher percentage of owned vehicles than competitors. In addition, we handle 2.32 million m2 of
warehousing floor area, almost 70% of which is located in Company-owned warehouses. Thanks to
our Company-owned resources, we have developed a structure enabling flexible round-the-clock andyear-round operations.
- As mentioned above, as we often use our own warehouses, waiting for cargo, an issue the logistics
industry is currently grappling with, is less of a problem for us, and due to our Company-owned
facilities, we do not need single drivers to spend long periods of time loading and unloading cargo,giving us another advantage over the competition.
- This is an especially great advantage when irregular events occur such as weather damage anddisasters. For example, even when delays occur due to snow damage, we are able to initiate roundthe-clock operations the next day or over the weekend to recover, earning a high degree of trust from
customers.
- Possessing our own assets has both advantages and disadvantages in terms of asset efficiency, but
the NIKKON Holdings Group completes the depreciation of trucks (four-year straight-line depreciation)
and warehouses (26-year straight line depreciation) at a swift pace to control the depreciation cycle,
thereby managing assets with a high profit margin as another strength.
36

[Competitive Advantage 5] Special Vehicles and Dedicated Equipment- We engage in vehicle development based on customer needs. For example, we set optimum specifications for our carriercars for each auto manufacturer and the types of completed vehicles to be transported. We also response in detailed
ways to the requirements of shippers such as changing rail container specifications two dual level designs based on
cargo contents.
- Additionally, with the aim of efficiently transporting two-wheeled vehicles, we possess more 200 trucks with doubledecker truck beds. By improving transportation efficiency in these ways, we enhance price competitiveness. We also
maintain fleets of specialized vehicles for transporting automobile engines and flat body trucks for transporting precisionequipment such as industrial robots. Moreover, many of our warehouses are equipped with cranes for loading andunloading purposes. This flexibility allows us to respond to customer needs in an order-made fashion.
- We have developed a business model that utilizes the characteristics of vehicle equipment. For example, we possessaround 600 carry cars for the transportation of completed four-wheeled vehicles in Japan, and also maintain a domestic
fleet of at least 130 connected two-car full trailer sets that generate fewer CO2 emissions in relation to loading capacity.
- We are proud of the trust we have earned from our many customers by deploying these specialized vehicles based andinstalling dedicated facility equipment based on these customer needs.
Carrier cars designed toload microbuses

Double-decker carriers
for loading motorcycles

31-foot containers forrail transportation

Two-car full trailers

37

[Competitive Advantage 6] Testing- There are no competitors in the logistics industry that operate a testing business like NIKKON Holdings,
making it a highly unique business. We believe the barriers to entry for other companies are high, given
the relatively high levels of expertise and profit margins, as well as the high confidentiality of information
due to the technological development involved.

- In recent years, testing work related to electric vehicles has been on the rise, including the dataacquisition needed for the development of electric motors and other electric drive systems, and work inthis field is expected to expand in the future.
- While most of our current customers are major automotive manufacturers, in recent years we have madeprogress developing new customers outside the automotive industry and plan to expand the business.
- However, since it takes a great deal of time to train engineers and the work has to be timed to coincidewith the development schedules of automakers, we are planning a phased business expansion.

Technical services

Physical property tests

Creation of cut models

Strength testing

Driving tests

38

[Competitive Advantage 7] Human Resources- Top management at NIKKON Holdings is comprised of industry professionals who have accumulated field experience and skill in thelogistics industry in Japan and overseas for more than 30 years. The management team formulates solid business strategies andmakes decisions backed by a diverse range of ideas and experiences.
- Meanwhile, we hire highly specialized external personnel for important posts throughout within the Group to drive practicaloperations. We have also accepted individuals who have previous served in high-ranking positions at general trading companies,
megabanks and the Self-Defense Forces in order to complement the various functions the NIKKON Holdings Group fulfills.
- Our outside directors include former directors of the Railway Bureau and Road Transport Bureau from the Ministry of Land,
Infrastructure, Transport and Tourism, as well as corporate executives serving concurrent roles, and women. Highly effective anddiverse discussions and decision making takes place under this structure.
- Traditionally, a culture of "don't leave things to others; do it yourself first" has taken root at NIKKON Holdings. We try to avoid
outsourcing as much as possible, and this includes carrying out cleaning in-house, creating an in-house magazine including a
digital version, holding general meetings of shareholders in our head office building, providing tours of our operating sites forinvestors and students, holding driving skill competitions for the truck drivers and forklift operators on company premises,planning and implementing quality control contents together with domestic and overseas Group companies, at creating
decorative kadomatsu displays for New Year. In these ways, we operate based on the hands-on involvement of employees ineverything. We have even set up our own day care center from scratch without outside assistance.

39

ESG Action (1)[ Governance ]Nikkon Group's organizational framework for sustainability
NIKKON Holdings Co., Ltd.
Board of Directors
Sustainability Committee
Provide guidance and supervise[Execution of operations]
General Affairs Department/ESG Promotion Office
ESG Working GroupNIPPON KONPO UNYU SOKO CO., LTD.
Auto Technic Japan Co., Ltd.
NIPPON RIKUSO Co., Ltd.

CHUETSUTEC Co., Ltd.

MEIKON CO., LTD.

ITO-EXPRESS CO., LTD.

NIPPON UNYU CO., LTD.

NK PARTS INDUSTRIES, INC.

Other Group companies in Japan

Other Group companies outside Japan

 To enhance systematic measures regarding ESG as oneof the most important tasks in its business, the
NIKKON Holdings Group has its directors oversee ESG
activities directly, and has put in place a system toswiftly formulate policies and provide guidance,
thereby ensuring highly effective activities.
 In July 2021, the ESG Promotion Office was establishedat NIKKON Holdings as the team responsible for
implementing ESG activities. As part of the office,working groups made up of members from eight corecompanies lead Group-wide activities.
 In addition, the Sustainability Committee that wasestablished in October 2021 functions effectively tosupervise ESG activities as an organization under the
direct control of directors.
 A female independent outside director chairs theSustainability Committee, and, under the direction of
the President and Representative Director, supervises
and provides guidance regarding the status of overall
ESG activities including diversity and environmental
action from the perspective of shareholders and otherstakeholders.
40

ESG Action (2)[Environmental Action]
Transportation is one of the businesses mostly closely connected with environmental issues as exhaustgases are released in the course of business. We bear a significant social responsibility to reduce CO2
emissions and actively pursue efforts on that front.
- Installation of solar panels for internal use- Switch to eco-friendly small and medium-sized vehicles- Promotion of modal shift- Switch to LED lighting in warehouses- Paperless operations, energy saving, recycling - Use of two-car full trailers- Improved transportation efficiency through improvement to loading efficiency- Utilization of bio fuels[Measures Related to Large Vehicles]
However, although transportation by large trucks is a core business activity of NIKKON Holdings, thedevelopment of technologies for EVs and FCVs are still insufficient for action in this area, andunfortunately we do not expect to see vehicles that will meet these requirements until 2030 or
beyond.
Three Issues to be Solved for the Introduction of Large Electric Vehicles(1) Establishment of technologies: Market launch of large EVs from 2030 or later(2) Development of social infrastructure: Nationwide charging facilities and securing of parking spaces(3) Passing on costs: Reflecting threefold increase in vehicle prices and higher costs due to reduced loading
capacity in prices

As eco-friendly vehicles cost more than conventional fossil fuel-powered vehicles and have a shorter
service life, future costs are expected to rise. We have been working on how to pass on these costs tosociety, and have tried to cut costs as much as possible to provide cheap transportation. We willcontinue to transform our business models in the future with these concerns in mind.

41

ESG Action (3)[Empowerment of Female Employees]The transportation and warehousing industries have traditionally involved heavy labor, making them somewhat unattractive towomen as places to work. Based on an awareness that this issue must first be addressed and improved upon, rather than simply
having women do the jobs that were traditionally performed by men, we will start by developing a workplace in which women canutilize their skills to succeed in a safe manner.
We will promote the hiring of female employees, and develop career plans and training schemes to have them experience theappeal and future potential of the logistic industry while grooming them for management positions. While it may take some time,rather than creating female managers in name only just to meet quotas, we will aim to develop a workplace in which working
women can be happy.
In new graduate hiring, we had set a target hiring ratio of at least 30% women, but in April 2022 the ratio was at least 40%, andwas more than 50% in April 2023.

[Human Resource Investment and Development] We have training programs for new employees as well as position-specific group training. We provide comprehensive training thatincorporates by management and practical work elements such as teaching employees the conduct and mindset expected of themas they progress, along with management and safety skills.
 We also develop succession plans for top management and operate the NIKKON Business School to cultivate next-generation
managers. The officers and top management of Group companies are assigned management challenges to discuss over a six-month
period and develop management plans that are actually effective. This raises individuals' management skills while strengthening the
network within the Group.
 We have established an overseas training program for junior employees. Training is conducted at overseas Group companies for aperiod of one year. The aim of the program is to not only for employees to gain operational know-how, but also to develop
multicultural communication skills and acquire broad and diverse values by actually living overseas, in order to cultivate humanresources who will be future managers.
 Conducting Endowment Lectures at Hitotsubashi University (Lectures sponsored by NIKKON Holdings) Through joint research withprofessors from Hitotsubashi University, we conduct lectures delivered by our president and other directors to teach the university's
students about practical business. We also run tours of our operating sites to show actual logistics in the field, enhancing the42
research level of students and contributing to the development of potential human resources for the future logistics industry.

Business Risks
 Over 50% of the NIKKON Holdings Group's business involves the automotive industry, and our business results
are impacted to a certain degree by the domestic economy, automotive production volume, and other factors.
The tight situation regarding semiconductor components and international logistics is improving, and thecurrent domestic logistics business environment is somewhat favorable.
 However, in addition to the risks of natural disasters and infectious diseases such as COVID-19 in the future,
there are other issues to be overcome including the Russian invasion of Ukraine, soaring fuel and energy prices
due to the weak yen, and labor shortages in the transportation industry including the so-called "2024problem." As risks of inflation and economic slowdown in global markets are also reasonably high, the situation
does not warrant optimism.
 Matters that relate to safety are the most important themes in our social mission, including transportation
safety affecting local residents, crew and workers, and the prevention of occupational accidents and incidents.
While we will demonstrate the utmost caution to prevent such eventualities, there is a risk that operations
could be halted as a result of a major accident or some other emergency situation.
 The financial figures we publicly disclose may be impacted by changes to accounting rules, tax laws, andstatutory regulations. Additionally, non-current assets such as warehouses and assets acquired through M&A
activities face risks of asset impairment in the event that profits are not posted according to plan.
 Adapting to societal changes by addressing environmental issues and investing in human resources, investingin the introduction of EVs and sustainable power generating facilities, and making the expenditures required bysociety could place pressure on profits, and may impact business results if the higher costs cannot be passed
on prices.

43

Japan Network
Japan
Business locations
Number of affiliates:

47

44

Global Network

Overseas
Business locations
Number of affiliates:

29 in nine countries

4 other affiliated companies
2 other affiliated companies

2 other affiliated companies

45